If news reports are to be believed, a proposal to prune the jurisdiction of the National Company Law Tribunal (NCLT) is afoot. The power of the NCLT to approve of schemes of compromise and arrangement involving companies, as reports would have it, would stand transferred to the Ministry of Corporate Affairs (MCA).
At first blush, this can sound reasonable — sanctioning a scheme can appear to be a routine administrative matter, and the judicial time of the NCLT can get freed up to focus on the other pressing burdens imposed on the tribunal. However, the reality is that such a move would not only be disastrous but would compound an existing disaster. To begin with, it was the jurisdiction of the High Courts — creatures of the Constitution of India — that was replaced with the jurisdiction being vested in the NCLT. This move, first attempted in the early 2000s, was repeated in the newly-minted Companies Act, 2013. Both attempts were subjected to judicial review.
The Supreme Court approved of the shifting of the jurisdiction but ruled clearly that the composition of the NCLT ought to ensure that judicial members of the Tribunal were taking decisions on company law. In a nutshell, the court put the proposal to terms, pruned the framework for the shifting of jurisdiction, and laid down safeguards.
By proposing to now move the jurisdiction from the NCLT directly to the MCA, there would be a direct conflict with the basis on which the Supreme Court approved of the removal of the High Courts from jurisdiction over company law. That apart, such a move would be totally unwise for a variety of reasons.
via Bring back court scrutiny of corporate schemes | Business Standard Column
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